Energy Policy:

Can the federal government afford President Obama's recent commitment to make federal buildings 20 percent more efficient over the next 10 years? During today's OnPoint, Lane Burt, technical policy director at the U.S. Green Building Council, explains the public-private contracts that will be used to pay for this project. He also discusses the outlook for additional efficiency policies in the current economic climate.

Transcript

Monica Trauzzi: Hello and welcome to OnPoint. I'm Monica Trauzzi. Joining me today is Lane Burt, technical policy director at the U.S. Green Building Council. Lane, thanks for coming on the show.

Lane Burt: Thanks for having me, Monica.

Monica Trauzzi: Lane, President Obama recently committed $2 billion for energy upgrades in federal buildings with another 2 billion coming from the private sector. The move would make buildings 20 percent more efficient over the next 10 years. Is this the boost that energy efficiency advocates were hoping for?

Lane Burt: Sure, it certainly is a huge boost and it's worth taking the time to just sort of marvel at the creativity that the administration showed, because in a time of congressional stalemate they figured out a way to direct approximately $4 billion towards energy efficiency. Something that nearly everyone agrees is worth doing.

Monica Trauzzi: And when they had previously discussed going ahead with these efforts, they were hoping to use money from oil and gas leases to sort of fund it. That didn't go over well in Congress.

Lane Burt: Well, you know, anytime funding comes up in Congress, obviously, there's a lot of yeas and a lot of nays about where it comes from and where it should go. But they've taken the initiative and they made an announcement last Friday that had three components and two of them you mentioned, but the first is the Better Buildings Challenge where folks in the private sector are committing to improve energy efficiency in their own buildings. And by doing so, they're going to direct their own funding into these pursuits and that totaled around $2 billion, but the federal government is also going to commit to some energy service performance contract, which is where an energy services company comes into the facility, looks around, finds out what needs to be done to improve it, to make it more efficient and actually just shares the savings with the federal government. So, they're sharing the savings with the taxpayer and once they are paid off, the taxpayer just keeps those on -- you know, those stay in the federal coffers. So there's really, really no way to be upset about this movement and there are lots of folks applauding it from a lot of different sectors for that reason. The third component was the promise of forthcoming guidance on the existing tax deduction for energy efficiency and that's something that we in the green building movement have long advocated for.

Monica Trauzzi: But what happens if the efficiency improvements that are promised aren't seen? Then who shoulders the burden of these projects?

Lane Burt: This is the beauty of an energy service contract, because part of what the energy service company does is guarantee the savings level. So it's not just the federal government that is waiting for the savings to accrue, if they don't, the performance company is on the hook for those, because they had invested in the systems, they have paid for the improvements. There was no upfront cost to the federal government. So, you know, in reality, these savings do happen because that's just the way the economics shakeout.

Monica Trauzzi: Is there any scenario where taxpayers could end up shouldering some of the cost?

Lane Burt: Not in these two initiatives, certainly not.

Monica Trauzzi: OK, so 20 percent, let's actually talk about the efficiency improvements. Would you consider 20 percent to be significant over a 10 year span?

Lane Burt: Sure, it's certainly a step in the right direction and at the U.S. Green Building Council we've certainly identified that there are a lot of opportunities in energy efficiency in commercial buildings, you know, public and private. And 20 percent is certainly a tip of the iceberg, but if you think about how that scales to all the 60 million square feet of commercial space around the country, you can see that these -- you know, $4 billion and 50,000 jobs is just a start.

Monica Trauzzi: In the current economic climate though, do you think that there will be companies in the private sector who are willing to make all of these upfront investments for these projects?

Lane Burt: Sure, I think that was a valid question up until last Friday and then what you saw is that, you know, the answer is unequivocally yes. You know, these private companies stepped up to the plate and accepted the challenge and committed to these investments on their own behalf. You know, there's very little for them in it besides, of course, the energy efficiency savings, besides the fact that it is the right thing to do and besides the attention and the technical expertise that they'll get from the White House and DOE.

Monica Trauzzi: Big picture there, how much of an impact does this have and doesn't need to be paired with a broader, stronger energy policy to really be effective?

Lane Burt: Sure, well, there's no doubt that more could be done. We've seen just this week the Government Accountability Office released a category -- or excuse me, a catalog of all the different green building initiatives going on in the federal government. And what they found is that there's 94 initiatives -- excuse me, 90 initiatives at 11 agencies, so there's a tremendous amount going on. And what they called for was a bit more interagency collaboration when they're dealing with the private sector and green building. And, you know, that's one thing that could be done administratively, but there's also a suite of other improvements that, you know, the agencies could take advantage of because they have tremendous existing authority to pursue energy efficiency. And that's all on the administrative side. Obviously, congressionally and legislatively there's still a lot that can be done. There's many proposals, you know, many of which we support and we hope that the outlook becomes more positive for them in the future.

Monica Trauzzi: Well, and from a policy standpoint, what is the outlook for some kind of energy policy in the next couple of years?

Lane Burt: Well, certainly the congressional stalemate that we're in now doesn't show signs of abating, but that doesn't mean that, you know, things can't get done. Things do get done. Longshots happen every year. So, I know from our perspective, we hope that the energy efficiency longshots are the ones that make it into the package, as opposed to any other longshot.

Monica Trauzzi: All right, we'll end it right there. I thank you for coming on the show, nice to see you.

Lane Burt: Thank you, nice to see you.

Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.